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Recovery or not?

U.S. Clay Producers Traffic Association Spring Meeting, March 21-23 2011 Hilton Head, SC. Recovery or not?. Jack Mahoney Trade & Marketing Maersk Line. US economic indications?. Emerging markets lead demand. Asian Demand and Imports.

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Recovery or not?

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  1. U.S. Clay Producers Traffic Association Spring Meeting, March 21-23 2011 Hilton Head, SC Recovery or not? Jack Mahoney Trade & Marketing Maersk Line

  2. US economic indications?

  3. Emerging markets lead demand Asian Demand and Imports • Global economy continues to recover: between 3.0-4.0% growth consensus • Emerging markets rebounded strongly during 2010 • After a 2H10 slowdown, the US economy is regaining momentum • In Europe, Germany is recovering due to export growth. Challenges remain in other parts of Euro area • Global international trade volumes recovered to pre-crisis levels

  4. Looking ahead Supply & demand Demand Growth: Maersk Line: 8-9% SeaIntel: 10-13% Goldman Sachs: 10.7% Clarksons: 10.4% JP Morgan: 8.7% Deutsche Bank: 7.6% OECD total: 7.4% Drewry: 7.4% IMF total: 6.3% Supply Growth: Maersk Line: 8-9% Alphaliner: 9.5% Clarkson: 6.7% Drewry: 8.5%

  5. Panama Canal ExpansionGlobal infrastructure change Source: Panama Canal Authority

  6. EquipmentThe lowest equipment-to-slot ratio ever Total box production in 2011 needs to be around 4.2M TEU to maintain the current balance This is close to production capacity Due to bottlenecks (e.g., tight labor supply) the container factories are only operating at only 2/3 utilization A shortage of 1.5M TEU… “The reduced availability of container units means that the industry will need to adapt through faster equipment turnaround, increased upkeep of old containers and extending the lifespan of containers” Source: Alphaliner

  7. Slow-SteamingHere to stay (as is BAF)

  8. Equipment imbalancesNo prospects for that to change People are here Imports go here Production is here Exports come from here

  9. From here… • “Surplus” fleet has been largely absorbed due to strong recovery 2010 & slow steaming • ’10-’11 rates: up on strong capacity utilization & equipment shortages, 1H10 especially • Equipment will remain tight. Impact to exports– when emerging market is demanding raw materials & imports? • Slow steaming has a limit • Added carrier awareness / discipline • Attention to “no shows” & free time • A return to the turmoil of 2009 is unlikely & it is not in the interest of shippers and carriers to see rates fall below breakeven levels

  10. Thank you U.S. Clay Producers Traffic Association Spring Meeting, March 21-23 2011 Hilton Head, SC

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